Full Year Results Presentation Year to 30 June 2018 04 September - - PowerPoint PPT Presentation

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Full Year Results Presentation Year to 30 June 2018 04 September - - PowerPoint PPT Presentation

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Full Year Results Presentation Year to 30 June 2018 04 September 2018 Agenda C hairman s Overview Steve Morgan Financial Results Barbara Richmond Review of Operations John Tutte Summary and Outlook Steve Morgan 2 FULL YEAR RESULTS

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SLIDE 1

Full Year Results Presentation

Year to 30 June 2018

04 September 2018

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SLIDE 2

Agenda

FULL YEAR RESULTS PRESENTATION

2

Chairman’s Overview Steve Morgan Financial Results Barbara Richmond Review of Operations John Tutte Summary and Outlook Steve Morgan

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SLIDE 3

A fifth consecutive year of record results

FULL YEAR RESULTS PRESENTATION

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  • Record pre-tax profits of £380m

up 21%

  • Record legal completions at

5,913 (incl. JV) up 9% on 2017

  • Turnover £1.92bn up 16%
  • ROCE up from 26.0% to 28.5%
  • Net cash of £63m at year end

(June 2017 Net debt: £73m)

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SLIDE 4

Financial Results

Barbara Richmond – Group Finance Director

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SLIDE 5

Financial Highlights

  • Homes turnover up 15% to £1.9bn
  • Operating margin 19.9%

(2017: 19.4%)

  • EPS up 22% to 85.3p
  • Cash conversion of 72%

(2017: 58%)

  • Final dividend of 19p, up 73%

(2017: 11p)

  • ROE 28.0% (2017: 27.7%)

FULL YEAR RESULTS PRESENTATION

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SLIDE 6

Income Statement

FULL YEAR RESULTS PRESENTATION

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F FY FY £m 2018 2018 2017 £m % Turnover - Homes 1,900 1,648 252 15 Turnover - Other 20 20 12 8 67 Total Turnover 1,920 1,660 260 16 Gross profit 469 469 405 64 16 Operating expenses (87) (83) (4) (5) Operating profit 382 382 322 60 19 Share of joint venture profits 5 5 1 4

  • Interest

(7) (8) 1 13 Profit before tax 380 380 315 65 21 Variance

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SLIDE 7

Analysis of private plots in Cost of Sales

FULL YEAR RESULTS PRESENTATION

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FY FY 2018 2017 Average plot cost eliminated (£k) 81 75 Average plot cost as percentage of ASP 21 21

  • Continued discipline on land buying
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SLIDE 8

Turnover by Geography

FULL YEAR RESULTS PRESENTATION

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  • Stronger H2 performance in the Northern region
  • 24% growth in the Central region
  • 36% growth in London with first legal completions at Colindale

£m £m % % £m %

North

433 433 23 23 461 28

Central

445 445 23 23 360 21

South

726 726 38 38 609 37

Greater London

296 296 15 15 218 13

Total Homes

1,900 99 99 1,648 99

Other

20 20 1 1 12 1

Total

1,920 100 100 1,660 100 FY 2017 FY 2018

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SLIDE 9

Homes Turnover Analysis

FULL YEAR RESULTS PRESENTATION

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  • Record Homes revenue of £1.9bn, up 15%
  • Legal completions up 9% to 5,913 including JV
  • Private ASP up 7% to £380,200
  • Apartments 22% of private sales revenue (2017: 19%)
  • Social revenue 7.6% of turnover (2017: 7%) and 19% of volume

(2017: 19%)

FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var

Private Houses

1,365 1,248 117 9 3,631 3,627 4

  • 375.9

344.1 31.8 9

Private Apartments

390 390 285 105 37 985 985 678 307 45 395.9 420.4 (24.5) (6)

Total Private

1,755 1,533 222 14 4,616 4,305 311 7 380.2 356.1 24.1 7

Social

145 145 115 30 26 1,102 1,014 88 9 131.6 113.4 18.2 16

Total Homes

1,900 1,648 252 15 5,718 5,319 399 8 332.3 309.8 22.5 7

Turnover (£m) Volume ASP (£k)

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SLIDE 10

Private Turnover Analysis

FULL YEAR RESULTS PRESENTATION

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  • Homes private turnover up 14% to £1.8bn
  • Private volumes including JV up 9% to 4,811
  • Heritage Collection 72% of turnover (2017: 75%)
  • Bespoke product 28% of turnover (2017: 25%)
  • Help to Buy legal completions of 1,850 (2017: 1,717)
  • ASP higher due to geographical and product mix

FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var

Heritage

1,258 1,151 107 9 3,399 3,352 47 1 370.1 343.4 26.7 8

Bespoke

497 497 382 115 30 1,217 953 264 28 408.4 400.8 7.6 2

Total

1,755 1,533 222 14 4,616 4,305 311 7 380.2 356.1 24.1 7

Turnover (£m) Volume ASP (£k)

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SLIDE 11

Cash Flow

FULL YEAR RESULTS PRESENTATION

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FY FY FY FY FY FY FY Operating cash flow 2018 2018 2017 Net debt movement 2018 2018 2017 £m £m £m £m £m £m EBITDA 385 385 324 Operating cash flow 276 276 189 (Increase) in land (127) (41) Net movement in JV's 26 26 (1) Movement in land creditors 36 36 (27) Interest (4) (5) Net (investment) in land (91) (68) Tax (74) (56) Dividend (74) (44) Movement in WIP (40) (88) Other (14) (17) Net cash flow 136 136 66 Movement in NRV (8) (11) Other working capital movements 30 30 32 Opening net debt (73) (139) Operating cash flow 276 276 189 Closing net cash/(debt) 63 63 (73) Cash conversion 72% 72% 58% Average net cash/(debt) 22 22 (67)

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SLIDE 12

Net Assets

FULL YEAR RESULTS PRESENTATION

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£m June 18 June 17 Movement Land 1,439 1,312 127 WIP 779 779 739 40 NRV Provision

  • (8)

8 Land creditors (387) (351) (36) Net investment in inventory 1,831 1,692 139 Other working capital (399) (395) (4) Tax (35) (34) (1) Fixed Assets 17 17 18 (1) Investment in JV 6 6 27 (21) Capital Employed 1,420 1,308 112 Net cash/(debt) 63 63 (73) 136 Net Assets 1,483 1,235 248

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SLIDE 13

Plot Cost Carried Forward

FULL YEAR RESULTS PRESENTATION

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0% 5% 10% 15% 20% 25% 10 20 30 40 50 60 70 80 2015 2016 2017 2018 £k

Owned Owned & Contracted Owned and contracted plot cost as % of private ASP in year

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SLIDE 14

Review of Operations

John Tutte – Group Chief Executive

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SLIDE 15

Continued growth and expansion

FULL YEAR RESULTS PRESENTATION

15 4 Year Growth Record

  • Turnover

+122%

  • Profit before Tax +186%

0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 50 100 150 200 250 300 350 400 450 2014 2015 2016 2017 2018 PBT (£m) Revenue (£bn)

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SLIDE 16

Continued growth and expansion

FULL YEAR RESULTS PRESENTATION

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Divisions

  • 15 homes’ divisions
  • New division in Thames Valley
  • Greater London reorganised into

East and West divisions Harrow Estates

  • Restructured to manage group-wide

forward land activities

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SLIDE 17

FULL YEAR RESULTS PRESENTATION

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Continued growth and expansion

Regions

  • First full year contribution from

East Midlands

  • Strong growth in Central and

South regions

  • Good demand across all regions

Greater London

  • 186 apartments sold to M&G for

PRS at Colindale Gardens

  • Planning application at Alton

Estate, Roehampton for c.1,100 homes to be submitted in October

  • Stable market in outer boroughs
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SLIDE 18

Investing in places

FULL YEAR RESULTS PRESENTATION

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Highlights

  • Land market remains attractive
  • 7,455 plots with planning acquired
  • 2,727 plots pulled-through from

forward land holdings

  • Larger sites acquired: c.180 plots
  • Relieve pressure on

replacement

  • Allow broader range of product

to be plotted

  • More scope to create great

places

Barrington Cement Works, Cambridge

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SLIDE 19

FULL YEAR RESULTS PRESENTATION

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Plots

  • wned

Total At 1 July 2017 23,980 2,120 26,100 Legal completions (5,718)

  • (5,718)

Market additions 3,493 1,235 4,728 Forward land pull through 2,627 100 2,727 Transfers 1,458 (1,458)

  • Other (land sales and replans)

(40) (167) (207) At 30 June 2018 25,800 1,830 27,630 Contracted plots

Investing in places

Movement in Current Land Holdings

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SLIDE 20

FULL YEAR RESULTS PRESENTATION

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Total Plots At 1 July 2017 26,400 Additions 8,484 Transfers to current land (2,727) Strategic review (1,457) At 30 June 2018 30,700 Analysis Jun 18 Jun 17 Land owned without planning 2,973 2,820 Land contracted without planning 2,722 1,357 Options − allocations 12,257 11,614 − realistic prospect 12,748 10,609 30,700 26,400

Investing in places

Movement in Forward Land Holdings

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SLIDE 21

FULL YEAR RESULTS PRESENTATION

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Current Land % Forward Land % Current Land % Forward Land % North 5,331 19 19 12,805 42 42 5,382 21 12,407 47 Central 7,848 28 28 5,907 19 19 6,483 25 6,041 23 South 10,356 38 38 10,131 33 33 9,963 38 7,845 30 Greater London 4,095 15 15 1,857 6 4,272 16 107 ─ 27,630 100 100 30,700 100 100 26,100 100 26,400 100 Combined GDV c. £20bn June 17 June 18

Investing in places

Land Holdings by Geography

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SLIDE 22

Operational Highlights

FULL YEAR RESULTS PRESENTATION

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  • Great homes: great places
  • Product
  • Placemaking
  • Health and well-being
  • Nature for People
  • Community infrastructure
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SLIDE 23

Operational Highlights

FULL YEAR RESULTS PRESENTATION

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  • c.100 new jobs created
  • c. 2,300 directly employed
  • 95% proud to work for Redrow
  • 15% workforce trainees
  • Top 100 Apprenticeship Employer

for 5th consecutive year

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SLIDE 24

Operational Highlights

FULL YEAR RESULTS PRESENTATION

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  • Restructured Health, Safety and

Environmental Management teams

  • NextGeneration Gold standard
  • Investing in quality control
  • Customer recommendation 89.1%
  • Off-site manufacture
  • Build cost increases c.4%
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SLIDE 25

The Market and Outlook

FULL YEAR RESULTS PRESENTATION

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2018 2018 2017 FY Value of private reservations * £1,730 £1,562 Private reservations per outlet per week * 0.70 0.67 Closing private order book (excl. JV) £890m £890m £915m Closing total order book (excl. JV) ** £1,144m £1,030m Cancellation rate 15% 15% 15%

* Figures are 52 weeks LFL ** Includes Social

  • Sales rate excluding PRS 0.67 (2017: 0.67)
  • Total order book up 11%
  • Cancellation rate unchanged

Sales Market 2018

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SLIDE 26

FULL YEAR RESULTS PRESENTATION

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2017 Actual 2018 Actual 2019 Forecast Average outlets 124 124 130

  • Openings in line with forecast
  • Closures higher than forecast due to better than expected sales rates

The Market and Outlook

Outlets

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SLIDE 27

FULL YEAR RESULTS PRESENTATION

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2019 2019 2018 Private Reservation statistics 9 weeks to 31 August Volume of net reservations 760 760 791 Reservations per outlet per week 0.65 0.68 Average number of outlets 130 130 130

  • Demand remains good
  • Pricing stable

The Market and Outlook

Current Sales Market

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SLIDE 28

Summary and Outlook

FULL YEAR RESULTS PRESENTATION

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  • Market stable
  • Mortgage availability and pricing competitive
  • Help to Buy continues to deliver economic growth and jobs
  • Planning delays impacting outlet growth
  • Outlook
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SLIDE 29

Redrow plc Redrow House

  • St. David’s Park

Flintshire CH5 3RX Tel 01244 520044 Fax 01244 520720 DX 708570 St. David’s Park Email groupservices@redrow.co.uk Website www.redrow.co.uk